Drug Prices and Shortages Jeopardize Patient Access to Quality Hospital Care

Prescription Drug Pricing. Green and white capsules on a pharmacy counter.

The inability of many patients to obtain needed drug therapies due to either high prices or shortages has negatively affected patient outcomes.¹ Nearly 30% of Americans say they haven’t taken their medication as prescribed due to high drug prices, and it is estimated that more than 1.1 million Medicare patients alone could die over the next decade because they cannot afford to pay for their prescribed medications.²^,³

The high prices for drugs and shortages of many critical drugs like chemotherapy and IV saline bags also impact hospitals’ ability to provide a range of services to their communities, contributing to wider problems with access to care. Hospitals are major purchasers of drugs for use in patient care, and acquiring costly medicines and securing alternative therapies during a shortage are consuming a larger share of hospitals’ finite resources. As drug prices continue to rise, hospitals have fewer resources available to finance other parts of their operations, such as paying staff and purchasing other supplies needed for patient care.

In a recent AHA report, we highlighted the range of cost-related challenges that hospitals and health systems continue to face that have created sustained headwinds for the field. These cost-related challenges include labor, medical supplies and administrative costs related to dealing with private insurance denials and prior authorizations. But of particular concern is the alarming and worsening three-part trend of rising prices for existing drugs, new drugs being introduced at record-high prices and shortages for many critical drugs.

A new infographic highlights these recent trends and the extent of the challenges that hospitals and health systems face related to their drug costs.

1. In 2023, drug companies continued to introduce new drugs at record prices while existing drug prices skyrocketed and consistently outpaced general inflation.

The median annual price for new drugs was $300,000, an increase of 35% from the prior year.⁴ A recent report by the Department of Health and Human Services Assistant Secretary for Planning and Evaluation found that between 2022 and 2023, prices for nearly 2,000 drugs increased faster than the rate of general inflation, with an average price hike of 15.2%.⁵ The January 2022 to January 2023 increase of 15.2% translates to an average of $590, more than a three times the previous year’s increase of $172.

2. Drug shortages were the highest in a decade exacerbating hospitals’ challenges.

In 2023, there was an average of 301 drugs in shortage per quarter, an increase of 13% from the previous year. More than 99% of hospital and health system pharmacists reported experiencing drug shortages in 2023, with 85% of respondents describing the severity of drug shortages as critically or moderately impactful.⁶ These shortages have been caused by many factors, including fractured global supply chains and an unavailability of raw materials. Generic drugs are estimated to make up as much as 83% of shortages due to decisions by drug companies that lack incentives to produce low-margin medications.⁷

3. Managing drug shortages adds as much as 20% to hospitals’ drug expenses.

Drug shortages have forced hospitals to expend additional resources, including staff time to find, procure and administer alternative drugs. Often when a particular drug needed by a patient is unavailable through their traditional suppliers, hospitals have been forced to find other suppliers, renegotiate contracts, undergo additional training to ensure medication safety using alternative therapies and undertake other time-consuming and costly processes.⁴ In some cases, hospitals have needed to acquire another alternative drug, often at higher prices, to administer to their patients. Together, these strategies alone have increased hospitals’ drug expenses by as much as 20%.⁸

Though the problem of high drug prices is not a new issue for hospitals and health systems, the rate at which drug prices are increasing combined with the problem of drug shortages is becoming unsustainable for the field and having a direct impact on patient outcomes. Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients’ access to needed care.

Download the 2024 AHA Costs of Caring Report

Drug Prices

Drug shortages